Begin with quantities and commitments
For a livestock operation in the surrounding Saskatoon region, the useful starting point may be feed requirements, supplier capacity and expected delivery weeks. Keep the order confirmation and any cancellation or substitution terms beside the payment record. An advance that secures supply does not necessarily secure a fixed final price.
Record the person who will confirm delivery and the document that closes each portion of the order. This prevents an early payment from being forgotten when a later supplier statement arrives and gives the owner a practical basis for checking shortages.
Worked example: a winter feed order
Consider a hypothetical $36,000 feed order, before any applicable tax, with $12,000 paid now. The schedule shows $24,000 still committed. If the supplier later delivers $15,000 of feed and applies $5,000 of the advance, the delivery statement has $10,000 payable and $7,000 of unapplied advance remains.
The full remaining commitment is still $24,000 until another payment is made. It consists of the current $10,000 balance plus the future $14,000 net payment after the remaining advance is applied. That reconciliation prevents the deposit from being counted twice.
Keep forecasting separate from tax treatment
A cash plan records when money moves and what commitments remain. The income-tax treatment of a prepayment requires its own review. CRA allows a cash method for qualifying farming income, but that does not make GST/HST reporting cash-based. Separate activities and reporting methods need appropriate records.
Similarly, a supplier’s GST treatment and Saskatchewan farm PST exemption depend on the actual purchase. Retain product descriptions and any required exemption evidence rather than selecting a tax code solely because the buyer operates a farm.
Review these items before another order
Update opening cash, expected livestock receipts, existing supplier balances, loan payments and the next delivery commitments. Then show one slower-collection scenario. A forecast is more useful when the owner can see which assumption causes the lowest cash week.
Reconcile the advance balance to the supplier statement every month. Investigate unused balances, changed quantities and credit notes promptly, and carry the supporting schedule into the accountant’s year-end package. The next buying decision can then use commitments that are actually current.
Put this into practice
Sources and current guidance
A practical next step
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